The third CEO to face a parliamentary review into the four major banks was grilled extensively over remediation to home loan customers.
CEO Shayne Elliott was also asked about his thoughts on mortgage brokers and the value they bring, as well as other questions on small business lending, CEO salaries, branch closures and of course, fees for no service.
One of the heaviest parts of the three hour questioning was when Elliott was asked about the more than 3000 customers who had overpaid on their home loans and were eligible for remediation.
Member of the committee, Matt Keogh MP, asked how that had happened. Elliott said the root cause was complex products, a lack of accountability and poor change management.
After more discussion on the remediation plans ANZ had in place for these customers, Keogh said this problem had been discovered in 2003.
He asked Elliott, “That’s 15 years later. I know you’ve apologised, you said you’ve changed the system, but how did it have to wait for a RC to wait for this problem?”
Interrupting Elliott, Keogh accused the bank of dragging its feet, to which the bank boss went on to say there had been an unsuccessful attempt at remediating customers.
Elliott said, “We were not dragging our feet. You’re quite right to point it out. It’s shameful, it’s wrong. That particular issue you’re talking about nobody is proud of it, it was absolutely a mistake.
“The original attempts to remediate it for some of the reasons we have talked about before, about the way the place was organised etc. were poor, and it didn’t get fixed properly the first time.
“In fact the initial remediation was badly done and then it had to get re-remediated, so that’s absolutely unacceptable and that’s why we’re making the changes. And we have made changes to executives as an outcome of that and making changes to the way we organise the place and hold people to account for remediation process, to avoid that.”
Keogh also brought up an ASIC review which looked into CBA, ANZ and NAB. The review said the regulator had found documents from two of these banks which called remediation a “distraction”.
Elliott admitted that he believed ANZ was one of those banks referred to. CBA has already denied being the second bank.
Earlier in the session, the deputy chair of the committee asked Elliott about the role mortgage brokers play, despite the bank not owning any broker firms.
In a very positive response to the industry, he said, “We think brokers play a very important role in the market.
“More than half of all mortgages originated in Australia come from brokers today, so customers like the service, they get value from it.
“I accept there’s the potential for conflicts of interest there for remuneration and we have moved away from volume based commissions. People have floated the idea of whether it should be a flat fee and who should pay.
“I think all of those things are worthy of discussion. My only comment would be, no system is perfect and any system will have potentially unintended consequences and I think with the broking industry where the regulators can sit down and consider improvements to that model.
“But as of today we think they perform a valuable role that consumers prefer and choose to increase the amount of business they give to brokers every year.”
Hon. Matt Thistlethwaite MP agreed that the notion of a broker was good in its purest form, but the Royal Commission showed banks had tried to establish relationships with brokers through things like bonuses.
Elliott said, “I think that most brokers are decent, honourable people, who do the right thing for their customers. Most people have a lifetime relationship with their clients, it’s not just transactional. But I think there can be improvements there around that.”
